INSUBCONTINENT EXCLUSIVE:
equity inflows and exits after New Delhi made its prior approval mandatory for any direct or indirect Chinese investments, experts and
industry officials said.
Limited partners, or LPs that are investors in a PE fund, could use these emergency provisions that enable them to
opt out from participating in a deal due to the regulations, commercial considerations, or even religious reasons
These include exemptions from investments in industries such as alcohol, pork processing or firearms.
Chinese tech investors have put in an
estimated $4 billion into Indian startups over the past two years
In addition, global buyout firms such as TPG, KKR, Carlyle and Blackstone have 20% to 35% allocation coming from the LPs based out of China
For Asia funds of global buyout funds, one third of the total commitments have come from China and Hong Kong
While there is, of course, some apprehension that the regulations could be interpreted broadly, and require funds with China LP
contributions to obtain prior approval for their FDI transactions in India, in the worst case, the government may bring funds with majority
Indian private-equity funds is whether the new regulations will affect local investments by global PEs through their Asia-focused funds,
capital industry, is yet to respond to the changed regulations
Renuka Ramnath, chairperson of IVCA, declined to comment when reached by ET.
The single biggest Chinese investment in India is the $1.1
billion acquisition of Gland Pharma from KKR India by Fosun in 2018
This accounts for 17.7% of all Chinese FDI into India
But that too got embroiled in controversy and had to be revised in 2017, much before the current notification.